Sopra Steria - 2018 Registration document

ADDITIONAL INFORMATION Disclosures arising from specific obligations – Other risks

2.3.2. INTELLECTUAL PROPERTY RISKS

Risk description

Risk management

The protection of the Group’s intellectual property is essential for the protection of the Group’s assets, and especially for entities with activities in software development.

To protect its intellectual property, the Group relies on a combination of contracts, copyrights, trademarks, patents and confidentiality and trade secrecy obligations. In addition, due to their complexity, the technological fields covered by the Group involve an increasing number of issues linked to intellectual property, special attention is given to specific contractual clauses related to intellectual property, in particular during integration of third- party software, use of software company licences in connection with integration projects or infrastructure management services and/or for any issues regarding reuse of software modules in connection with integration projects. Operational staff regularly receive training on protecting intellectual property. Sopra Steria and its subsidiaries have protected the main trademarks used in each country concerned. The brand portfolio is managed by the Legal Department in conjunction with an intellectual property advisor. Sopra Steria and its subsidiaries own exclusive intellectual property rights to all their software, either through having developed it in-house or by having acquired if from third parties. Software packages developed by the Group, in particular by Sopra Banking Software or by Sopra HR Software, are generally marketed directly. However there are a few distribution agreements with partners. Sopra Banking Software holds patents for the technical algorithms used by various technological and functional components of the Sopra Banking Platform software suite, designed for banks and financial institutions.

Litigation, government, legal or arbitration proceedings Within the framework of everyday management of the Group’s activities, some companies may be involved in legal proceedings. Provisions are recognised in respect of ongoing disputes, as detailed in Note 10.1 to the consolidated financial statements in Chapter 4 of this document (page 151). The Group has received claims from the tax authorities, mainly in France and India. In France, tax disputes mainly involve the CIR (R&D tax credit). In India, disputes notably concern the procedures for the temporary tax relief for which the Group was eligible in the past, the application of withholding taxes for certain flows and the transfer pricing policy. These claims are subject to appeal during pre-litigation phases before the various administrative authorities or during litigation phases before the courts. At 31 December 2018, the amount of provisions set aside for these tax risks was €44.2 million for the Group as a whole.

The Group is not aware of any legal or arbitration proceedings which could have a significant impact other than those reflected in the Group’s financial position. To date, the Company is not aware of any governmental, legal or arbitration proceedings, including any proceedings that may be suspended or threatened, which may have or have had a material impact on the financial position or profitability of the Company or Group during the past twelve months. However, Sopra Steria cannot rule out the possibility of further litigation proceedings being initiated as a result of events or facts that are not currently known and the associated risk of which cannot yet be determined and/or quantified. Proceedings of this kind may therefore have a material unfavourable effect on the Group’s net profit or image.

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SOPRA STERIA REGISTRATION DOCUMENT 2018